Back in the mid-1990s, Oakland contractor Joe Debro was one of a few people to publicly question the deal to bring the Raiders back from Los Angeles. Debro warned that it could end up costing the City of Oakland and Alameda County tens of millions of dollars. But politicians, Raiders' officials, and the press derided Debro at the time as being a naysayer. The intervening years, however, proved Debro was right. And now he's filed a new lawsuit against the Raiders, alleging that the professional football team also defrauded the city and county because it never repaid a $53.9 million "loan."
According to public records, the loan made by the city and county in 1995 to the Raiders has grown to at least $124.8 million, including interest. And Debro maintains that the loan was a fraud from the beginning because the Raiders never had any intention of repaying. There's evidence to support his claim: The Raiders have never written a check to the city and county to repay any amount of the loan, and have no plans to do so. Moreover, the city and county, acting through their joint panel — the Oakland-Alameda County Coliseum Authority — have never asked the Raiders to repay the loan and have no known plans to do so.
As such, Debro alleges that the loan was actually an illegal gift of public funds. "It's not a loan," he said. "It's a fraud."
Debro's lawsuit, filed recently in Alameda County Superior Court against the Raiders, is not the first time that he has alleged that the loan was fraudulent. He filed a similar suit about a decade ago, but it was thrown out on a legal technicality: The court ruled that he had missed the statutory deadline for filing the litigation.
But now, Debro believes he can overcome that problem. He contends that the $53.9 million loan is an "ongoing fraud." And he has two pieces of evidence to support his claim. First, a ruling in a lawsuit between the Raiders and the National Football League concluded that the $53.9 million payment made by the city and county to the Raiders was "revenue" for the Raiders. As such, the team had to share a portion of the money with the NFL. Normally, teams don't have to share loans they receive with the rest of the league, but they must share revenue. In other words, part of a supposed loan from East Bay taxpayers to the Raiders actually ended up in the coffers of the 31 other teams around the country.
In addition, Debro notes that the Oakland-Alameda County Coliseum Authority continues to list the Raiders' loan as an "asset" on its books, even though the Raiders have no intention of paying it back. Typically, a loan cannot be considered an "asset" by the entity that gave out the loan unless it has a reasonable expectation of being repaid.
In this case, it appears that the Coliseum Authority is counting on the city and county taxpayers to repay the loan they gave to the Raiders. If you're scratching your head right now, you're not alone. Here's what happened:
To entice the Raiders to return to Oakland in 1995, the city and county floated $200 million in bonds. Of that, $53.9 million went to the Raiders as a "loan." Most of the rest went to remodel the Coliseum. But now, instead of the Raiders repaying the bonds used to finance the loan, the city and county are being expected to do it. And that's in addition to the $10 million that the city and county have each been paying from their general funds every year to pay back the bonds used to remodel the Coliseum.
Alameda County Controller Pat O'Connell, who keeps the books for the Coliseum Authority, did not return a phone call seeking comment as to why he continues to list the Raiders' loan as an "asset" when the team has no intention of repaying it. Deena McClain, general counsel and interim executive director of the Coliseum Authority, also did not return a phone call seeking comment for this report. The county counsel's office said it would call back, but did not. Oakland Councilman Ignacio De La Fuente, who sits on the Coliseum Authority board and was a strong backer of the loan to the Raiders in 1995, referred questions to O'Connell.
Raiders' CEO Amy Trask declined to comment on the specifics of Debro's lawsuit, but said: "Mr. Debro filed virtually identical claims well over a decade ago. There was no merit to those claims then, and there's no merit to those claims, now."
The Raiders previously contended that the loan has been at least partially "repaid" because the Coliseum Authority got to keep the revenues generated by the sale of personal seat licenses. Indeed, the city and county had hoped that PSL revenues would repay all of the bonds floated for the deal. But the PSLs fell well short of expectations.
The city and county, meanwhile, have long contended that they can't force the Raiders to repay the money because it was a so-called "non-recourse loan." That is, the city and county cannot sue the Raiders to get their money back. However, under state law, citizens like Debro can sue on behalf of the city and county. He is asking the court to force the Raiders to repay the $53.9 million.
If Debro succeeds, it could be welcome news for East Bay taxpayers. The $10 million that Oakland must hand over each year to pay the bonds floated to remodel the Coliseum exacts a huge toll on its general fund, especially for a city with an ongoing public safety crisis. In fact, that $10 million annual payment would allow Oakland to hire more than fifty police officers.
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